1
AMENDED AND RESTATED
INVESTORS' AGREEMENT
dated
as of
March 29, 1999
among
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND III, L.P.,
THL-CCI LIMITED PARTNERSHIP,
THL FOREIGN FUND III, L.P.,
THL FSI EQUITY INVESTORS, L.P.,
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II - A, L.P.,
DLJ OFFSHORE PARTNERS II, ▇.▇.,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇.,
▇▇▇ DIVERSIFIED PARTNERS - A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.
DLJ MILLENNIUM PARTNERS - A, L.P.,
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, ▇.▇.,
▇▇▇ ▇▇▇ ▇▇, ▇.▇.,
▇▇▇ FIRST ESC, L.P.,
CHASE EQUITY ASSOCIATES, L.P.,
▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP L.P. 1997,
KECALP INC.,
ML IBK POSITIONS, INC.
AND
CERTAIN OTHER PERSONS NAMED HEREIN
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TABLE OF CONTENTS
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PAGE
ARTICLE I DEFINITIONS
Section 1.1 Definitions............................................. 2
ARTICLE II CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.1 Composition of the Board................................13
Section 2.2 Removal.................................................13
Section 2.3 Vacancies...............................................14
Section 2.4 Action by the Board.....................................14
Section 2.5 Conflicting Charter or Bylaw
Provision...............................................15
ARTICLE III RESTRICTIONS ON TRANSFER
Section 3.1 General.................................................15
Section 3.2 Legends.................................................16
Section 3.3 Permitted Transferees; Transfers
by THL Entities; Exchanges by THL
Entities................................................16
Section 3.4 Restrictions on Transfers by
Institutional Shareholders..............................17
Section 3.5 Restrictions on Transfers by
Management Shareholders.................................18
Section 3.6 Company Right of First Refusal..........................19
Section 3.7 Notifications Regarding Transfers.......................20
ARTICLE IV TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS;
PREEMPTIVE RIGHTS
Section 4.1 Rights to Participate in Transfer.......................20
Section 4.2 Right to Compel Participation
in Certain Transfers....................................23
Section 4.3 Preemptive Rights.......................................26
Section 4.4. Certain Other Purchases of Equity
Securities..............................................30
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ARTICLE V REGISTRATION RIGHTS
Section 5.1 Demand Registration.....................................31
Section 5.2 Piggyback Registration..................................34
Section 5.3 Holdback Agreements.....................................36
Section 5.4 Registration Procedures.................................36
Section 5.5 Indemnification by the Company..........................41
Section 5.6 Indemnification by Participating
Shareholders............................................42
Section 5.7 Conduct of Indemnification
Proceedings.............................................43
Section 5.8 Contribution............................................44
Section 5.9 Participation in Public Offering........................46
Section 5.10 Cooperation by the Company..............................46
Section 5.11 No Transfer of Registration
Rights..................................................47
ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS
Section 6.1 Confidentiality.........................................47
Section 6.2 Reports.................................................49
Section 6.3 Limitations on Subsequent
Registration............................................49
Section 6.4 Limitation on Purchase of Equity
Securities..............................................49
Section 6.5 Regulated Stockholders..................................50
ARTICLE VII MISCELLANEOUS
Section 7.1 Entire Agreement........................................51
Section 7.2 Binding Effect; Benefit.................................51
Section 7.3 Assignability...........................................52
Section 7.4 Amendment; Waiver; Termination..........................52
Section 7.5 Notices.................................................53
Section 7.6 Headings................................................55
Section 7.7 Counterparts............................................56
Section 7.8 Applicable Law..........................................56
Section 7.9 Specific Performance....................................56
Section 7.10 Consent to Jurisdiction; Expenses.......................56
Section 7.11 Representative..........................................57
Section 7.12 Severability............................................59
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AMENDED AND RESTATED
INVESTORS' AGREEMENT
AMENDED AND RESTATED AGREEMENT (this "Agreement") dated as of
March 29, 1999 among (i) ▇▇▇▇▇▇ Scientific International, Inc. (the "Company"),
(ii) ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund III, L.P. ("THL"), certain individuals associated
with THL listed on Schedule I attached hereto, THL-CCI Limited Partnership
("THL-CCI"), THL Foreign Fund III, L.P. and THL FSI Equity Investors, L.P.
("THL/FSI" and collectively with THL, the individuals listed on Schedule I,
THL-CCI, and THL Foreign Fund III, L.P., the "THL Entities"), (iii) DLJ Merchant
Banking Partners II, L.P. ("DLJMB"), DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II A, L.P., DLJ Diversified Partners - A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners - A, L.P., UK Investment Plan 1997
Partners, DLJ EAB Partners, L.P., DLJ ESC II, L.P., and DLJ First ESC, L.P.
(collectively the "DLJ Entities"), (iv) Chase Equity Associates, L.P. ("Chase
Equity"), (v) ▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP L.P. 1997, KECALP INC., and ML IBK Positions,
Inc., (collectively, the "▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities" and, together with each other
entity listed in clauses (iii) and (iv), the "Institutional Shareholders" and,
collectively with (ii), the "Equity Investors") and (vi) certain other Persons
listed on the signature pages hereof (including the trust pursuant to the Trust
Agreement, dated of even date herewith, between the Company and Mellon Bank,
N.A., as trustee (the "Rabbi Trust")) (the "Management Shareholders" and
individually, along with the THL Entities, DLJ Entities, Chase Equity, and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities, each a "Shareholder") and such other parties who may
become parties of this Agreement pursuant to the terms hereof.
W I T N E S S E T H :
WHEREAS, the parties hereto entered into an investors'
agreement, dated as of January 21, 1998 (the "Original Agreement"), to govern
certain of their rights, duties and obligations after consummation of the Merger
(as defined below); and
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WHEREAS, the parties hereto desire to amend and restate the
Original Agreement in its entirety as set forth below; and
WHEREAS, pursuant to the Subscription Agreement (as defined
below) the Equity Investors acquired securities of FSI Merger Corp. ("FSI"); and
WHEREAS, pursuant to the terms of the Merger Agreement (as
defined below), FSI was merged with and into the Company, with the Company as
the surviving corporation (the "Merger"); and
WHEREAS, pursuant to the Merger, the stock of FSI held by the
Equity Investors was converted into stock of the Company; and
WHEREAS, pursuant to the Merger, the Management Shareholders
retained shares of stock of the Company; and
WHEREAS, upon the Merger and pursuant to the Equity Investors'
commitment to purchase cumulative preferred stock of the Company, warrants to
purchase common stock of the Company were issued to the Equity Investors; and
WHEREAS, pursuant to the Rabbi Trust and any stock or option
plan, Management Shareholders hold shares of stock of the Company; and
WHEREAS, the parties hereto may obtain additional shares of
stock of the Company in the future;
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section I.1 DEFINITIONS. (a) The following terms, as used
herein, have the following meanings:
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"Adverse Person" means any Person whom the Board reasonably
determines is a competitor or a potential competitor of the Company or its
Subsidiaries.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person, provided that no securityholder of the Company shall
be deemed an Affiliate of any other securityholder solely by reason of any
investment in the Company. For the purpose of this definition, the term
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Applicable Law," with respect to any Person, means all
provisions of all laws, statutes, ordinances, rules, regulations, permits,
certificates or orders of any Governmental Authority applicable to such Person
or any of its assets or property or to which such Person or any of its assets or
property is subject, and all judgments, injunctions, orders and decrees of all
courts and arbitrators in proceedings or actions in which such Person is a party
or by which it or any of its assets of properties is or may be bound or subject.
"beneficially own" shall have the meaning set forth in Rule
13d-3 of the Exchange Act.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Closing Date" means January 21, 1998.
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"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company, non-voting common stock, par value $.01 per share, of the
Company and any stock into which such common stock and non-voting common stock
may thereafter be converted or changed.
"Demand Registration" means collectively, a THL Demand
Registration, an Institutional Shareholder Demand Registration, or a Management
Shareholder Demand Registration.
"Derivatives" shall mean options, warrants (including the
Equity Warrants) or other rights to acquire any Equity Securities of the
Company.
"Equity Investors" means the Institutional Shareholders and
the THL Entities.
"Equity Securities" means the Common Stock and preferred
stock, securities convertible into or exchangeable for Common Stock or preferred
stock, Derivatives, and any other equity security issued by the Company. In
connection with any reference to a class of Equity Securities which does not
specify whether such class is voting or non-voting, voting Common Stock and
non-voting Common Stock shall be treated as the same class of Equity Securities
to the extent that such voting and non-voting Common Stock have identical terms
other than with respect to voting rights.
"Equity Warrants" means warrants to purchase Common Stock
pursuant to the Equity Warrant Acquisition Agreement.
"Equity Warrant Acquisition Agreement" means the Common Stock
Warrant Acquisition Agreement, of even date herewith, among the Company, the
Institutional Shareholders and the THL Entities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Federal Reserve Board" means The Board of Governors of the
United States Federal Reserve System.
"Fully Diluted" means, with respect to any class of Equity
Securities, all outstanding shares of such class and all shares issuable in
respect of securities convertible into or exchangeable for such class, stock
appreciation rights or options, warrants and other irrevocable rights to
purchase or subscribe for such class or securities convertible into or
exchangeable for such class; provided, that no Person shall be deemed to own
such number of Fully Diluted shares of such class as such Person has the right
to acquire from any Person other than the Company.
"Initial Ownership" means, with respect to any class of Equity
Securities, the number of shares of such class of Equity Securities beneficially
owned and (without duplication) which such Persons had the right to acquire from
any Person as of January 21, 1998, or in the case of any Person that shall
become a party to this Agreement on a later date, as of such date, taking into
account any stock split, stock dividend, reverse stock split or similar event.
"Initial Public Offering" means the first sale after January
21, 1998 of Common Stock pursuant to an effective registration statement under
the Securities Act (other than a registration statement on Form S-8 or any
successor form).
"Merger Agreement" means the Second Amended and Restated
Agreement and Plan of Merger, as amended, dated as of November 14, 1997, by and
between the Company and FSI.
"New Common Securities" means the Common Stock, whether now
authorized or not, any rights, options or warrants to purchase Common Stock and
any indebtedness or stock of the Company which is convertible into Common Stock
(or which is convertible into a security which is, in turn, convertible into
Common Stock) issued after January 21, 1998; provided, that the term "New Common
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Securities" does not include (i) such Equity Securities issued as a stock
dividend to all holders of Common Stock pro rata or upon any subdivision or
combination of shares of Common Stock; (ii) shares of Common Stock issued upon
exercise of Derivatives outstanding on January 21, 1998; (iii) shares of Common
Stock issued to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (or entities designated by ▇▇. ▇▇▇▇▇▇▇ who
become upon such issuance a party to this Agreement in accordance with Section
7.3(a) and (b)) in exchange for up to $7,500,000 in cash; and (iv) Equity
Securities issued in connection with a THL Exchange.
"New Preferred Securities" means any preferred stock, whether
now authorized or not, any rights, options or warrants to purchase preferred
stock and any indebtedness or stock of the Company which is convertible into
preferred stock (or which is convertible into a security which is, in turn,
convertible into preferred stock) issued after January 21, 1998; provided, that
the term "New Preferred Securities" does not include such Equity Securities
issued as a stock dividend to all holders of preferred stock pro rata or upon
any subdivision or combination of shares of preferred stock and (ii) shares of
preferred stock issued upon exercise of Derivatives outstanding on January 21,
1998.
"Non-THL Shareholders" means all Shareholders other than the
THL Entities.
"Percentage Ownership" means, with respect to any Shareholder
at any time, (i) the number of Fully Diluted shares of Common Stock that such
Shareholder beneficially owns (and, without duplication, has the right to
acquire from any Person) at such time, divided by (ii) the total number of Fully
Diluted shares of Common Stock at such time.
"Permitted Transferee" means (i) in the case of Institutional
Shareholders (A) the Company, (B) any THL Entity, (C) any general or limited
partner or shareholder of such Shareholder, and any corporation, partnership or
other entity that is an Affiliate of such Shareholder (collectively,
"Shareholder Affiliates"), (D) any general
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partner, limited partner, employee, officer or director of such Shareholder or a
Shareholder Affiliate, or any spouse, lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator, testamentary trustee,
lifetime trustee, legatee or beneficiary of any of the foregoing persons
described in this clause (d) (collectively, "Shareholder Associates"), and (E)
any trust, the beneficiaries of which, or any corporation, limited liability
company or partnership, stockholders, members or general or limited partners of
which include only such Shareholder, such Shareholder Affiliates or Shareholder
Associates; provided, however, that in order for any of the parties identified
in clauses (C), (D) or (E) to be a Permitted Transferee in connection with a
Transfer (or series of related Transfers) in excess of 2.5% of such
Institutional Shareholder's Initial Ownership of the class of Equity Securities
to be transferred, such party must be acceptable to THL, which acceptance may
not be unreasonably withheld and which acceptance shall not be required for the
Transfer by KECALP Inc. of all of its Equity Securities to ▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP
International L.P. 1997, a Cayman Islands limited partnership; PROVIDED,
FURTHER, HOWEVER, that the foregoing proviso shall not be applicable if the
number of Shares of a class of Equity Securities to be Transferred by an
Institutional Shareholder pursuant to clause (C), (D) or (E), together with all
other Transfers of such class of Equity Securities by such Institutional
Shareholder and its Permitted Transferees pursuant to any of such clauses, is
less than (I) the aggregate number of Shares of such class of Equity Securities
Transferred by the THL Entities and their THL Designated Transferees in
accordance with clause (A) or (B) of the definition of "THL Designated
Transferees" MULTIPLIED BY (II) such Institutional Shareholders' Initial
Proportionate Equity Interest of such class, treating for purposes of this
proviso the Equity Warrants as part of the class of Common Stock, or
(ii) in the case of a Management Shareholder (A) the Company,
(B) any THL Entity, (C) a spouse or lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator, testamentary
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trustee, lifetime trustee, legatee or beneficiary of any of such Management
Shareholder, (D) any trust, the beneficiaries of which, or any corporation,
limited liability company or partnership, stockholders, members or general or
limited partners of which include only the Persons named in clause (B) or (C),
(E) bona fide financial institutions, to the extent that such transfer is in
connection with a pledge in connection with a borrowing arrangement unrelated to
a constructive or synthetic sale, such as any hedge, sale or purchase of any
derivative security or other action (other than Transfers expressly permitted by
the terms hereof) having the effect of reducing a Management Shareholder's
economic interest in Equity Securities or reducing a Management Shareholder's
exposure to a decrease in fair market value of Equity Securities, or other
similar transaction involving such Management Shareholder's Equity Securities,
or (F) a charitable institution as defined in Section 501(c) of the Internal
Revenue Code of 1986, as amended, which receives a bona fide gift of Shares,
which when aggregated with all other Transfers of Shares of such class of Equity
Securities by such Management Shareholder and its Permitted Transferees pursuant
to this clause (F) does not exceed 10% of such Management Shareholders' Initial
Ownership of such class of Equity Securities.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Primary Executives" means the following Management
Shareholders: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Public Offering" means any primary or secondary public
offering of shares of Common Stock pursuant to an effective registration
statement under the Securities Act other than pursuant to a registration
statement filed in connection with a transaction of the type described in Rule
145 of the Securities Act or for
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the purpose of issuing securities pursuant to an employee benefit plan.
"Qualifying Public Offering" means a Public Offering yielding
aggregate gross proceeds of at least $50,000,000.
"Registrable Securities" means at any time, with respect to
any Shareholder or its Permitted Transferees, any shares of Common Stock then
owned by such Shareholder or its Permitted Transferees until (i) a registration
statement covering such securities has been declared effective by the SEC and
such securities have been disposed of pursuant to such effective registration
statement, (ii) such securities are sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or (iii) such securities are otherwise
Transferred, the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing the legend required pursuant to this
Agreement and such securities may be resold without subsequent registration
under the Securities Act.
"Registration Expenses" means (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the securities registered), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including expenses relating to any comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters requested pursuant to Section 5.4(h)
hereof), (vi) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, (vii) reasonable fees and
expenses of up to one
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counsel for the Shareholders participating in the offering, (viii) fees and
expenses in connection with any review of underwriting arrangements by the
National Association of Securities Dealers, Inc. (the "NASD") including fees and
expenses of any "qualified independent underwriter" and (ix) fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but shall not include any underwriting fees, discounts, commissions
or transfer taxes attributable to the sale of Registrable Securities, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Shareholders or any fees and expenses of underwriter's counsel.
"Regulated Stockholder" shall mean Chase Equity Associates,
L.P. and any other Stockholder (i) that is subject to the provisions of
Regulation Y or Regulation K of the Federal Reserve Board, 12 C.F.R. Part 225
(or any successor to such Regulations) and (ii) that holds Equity Securities of
the Company and (iii) that has provided written notice to the Company of its
status as a "Regulated Stockholder" hereunder.
"Regulatory Problem" means any set of facts or circumstance
wherein it has been asserted by any governmental regulatory agency (or a
Regulated Stockholder reasonably believes that there is a risk of such
assertion) that such Regulated Stockholder is not entitled to acquire, own, hold
or control, or exercise any significant right (including the right to vote) with
respect to, any Equity Securities of the Company or any subsidiary of the
Company.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder" means each Person (other than the Company but
including the Equity Investors and the Management Shareholders) who is or shall
become a party to this Agreement, whether in connection with the execution and
delivery of the Original Agreement or this
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Agreement, pursuant to Section 7.3 or otherwise, so long as such Person shall
beneficially own any Equity Securities.
"Shares" means shares of Common Stock and other Equity
Securities held by the Shareholders on January 21, 1998 or acquired thereafter,
but excluding any Derivatives.
"Subscription Agreement" means each Subscription Agreement
dated as of January 21, 1998 between FSI and each of the Equity Investors.
"Subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"THL Designated Transferee" means (A) any general or limited
partner of the THL Entities (a "THL Partner"), and any corporation, partnership,
or other entity which is an Affiliate of the THL Entities or any THL Partner
(collectively, the "THL Affiliates"), (B) any managing director, general
partner, director, limited partner, officer or employee of the THL Entities or a
THL Affiliate, or the heirs, executors, administrators, testamentary trustees,
lifetime trustees, legatees or beneficiaries of any of the foregoing Persons
referred to in this clause (B) (collectively, "THL Associates"), (C) a
charitable institution as defined in Section 501(c) of the Internal Revenue Code
of 1986, as amended, which receives a bona fide gift by a THL Individual of
Shares (D) a bank, financial institution or other lender which receives a bona
fide pledge by a THL Individual of Shares, and (E) any trust, the beneficiaries
of which, or any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which include only the
THL Entities, THL Affiliates, THL Associates, their spouses or their lineal
descendants. The term "THL Entities," to the extent the THL Entities shall have
Transferred any of its Shares to
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"THL Designated Transferees," shall mean the THL Entities and the THL Designated
Transferees of the THL Entities, taken together, and any right or action that
may be exercised or taken at the election of the THL Entities may be exercised
or taken at the election of the THL Entities and such THL Designated
Transferees, unless otherwise restricted by the THL Entity engaging in such a
transfer.
"THL Individuals" means the Persons listed on Schedule I and
Schedule II.
"Underwritten Public Offering" means a firmly underwritten
public offering of Registrable Securities of the Company pursuant to an
effective registration statement under the Securities Act.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
Cause 2.2
Confidential Information 6.1(b)
DLJ Entities Representative 7.11(b)
Drag-Along Notice 4.2(b)
Drag-Along Notice Period 4.2(b)
Drag-Along Portion 4.2(a)
Drag-Along Rights 4.2(a)
Drag-Along Sale 4.2(a)
Drag-Along Sale Price(s) 4.2(b)
ethical wall 6.1(a)
Holders 5.1(b)
Indemnified Party 5.7
Indemnifying Party 5.7
Initial Proportionate
Equity Interest 3.4
Inspectors 5.4(g)
Institutional Shareholder
Demand Registration 5.1(g)
Management Representative 7.11(d)
Management Transfer 3.5(a)
Maximum Offering Size 5.1(e)
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▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities
Representative 7.11(c)
New Securities 4.3(a)
Nominee 2.3(a)
Offer Price 3.6(a)
Offered Shares 3.6(a)
Offeror 3.6(a)
Option Period 3.6(a)
Piggyback Registration 5.2(a)
Preemptive Rights Notice 4.3(a)
Preemptive Rights Portion 4.3(a)
Primary Executive Demand
Registration 5.1(h)
Records 5.4(g)
Representatives 6.1(b)
Shareholder 7.3(a)
Tag-Along Notice 4.1(b)
Tag-Along Notice Period 4.1(b)
Tag-Along Offer 4.1(b)
Tag-Along Person 4.1(a)
Tag-Along Portion 4.1(b)
Tag-Along Response Notice 4.1(b)
Tag-Along Right 4.1(b)
Tag-Along Sale 4.1(a)
Tag-Along Shareholder 4.1(a)
Third Party Purchase Notice 4.4
Third Party Purchase Portion 4.4
THL Demand Registration 5.1(a)
THL Entities Representative 7.11(a)
THL Entity Shareholder 7.3(d)
THL Exchange 3.3
Threshold Percentage 4.1(a)
Transfer 3.1(a)
Transfer Notice 3.6(a)
Trigger Date 6.4
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ARTICLE II
CORPORATE GOVERNANCE AND MANAGEMENT
Section II.1 COMPOSITION OF THE BOARD. The Board shall consist
of at least nine, but no more than ten, members (two of which shall be
individuals which are not "Affiliates" or "Associates" (as those terms are used
within the meaning of Rule 12b-2 of the General Rules and Regulations under the
Exchange Act) of any Shareholder or its Affiliates), of whom four shall be
nominated by THL, one shall be nominated by DLJMB, one shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and one shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Each Shareholder entitled to vote for the
election of directors to the Board agrees that it will vote its shares of Common
Stock or execute consents, as the case may be, and take all other necessary
action (including causing the Company to call a special meeting of shareholders)
in order to ensure that the composition of the Board is as set forth in this
Section 2.1; provided that, no Shareholder shall be required to vote for another
Shareholder's nominee or ▇▇. ▇▇▇▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇ if the number of shares of
Common Stock held by (i) ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ collectively, or (ii) such
other Shareholder making the nomination collectively with its Affiliates, as
applicable, is, at the close of business on the day preceding such vote or
execution of consents, less than 10% of such party's or parties' Initial
Ownership of shares of Common Stock on a Fully Diluted basis; and, provided
further, that for so long as Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ collectively own 10%
or more of their collective Initial Ownership of shares of Common Stock on a
Fully Diluted basis, designees nominated by THL and the Equity Investors shall
be selected in good faith after consultation with Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇,
which consultation shall involve a consideration of Messrs. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇'▇ views relating to the Company. The initial Board after the execution
of this Agreement shall consist of the individuals listed on Schedule III
hereto.
Section II.2 REMOVAL. Each Shareholder agrees that if, at any
time, it is then entitled to vote for the removal of directors of the Company,
it will not vote any
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of its shares of Common Stock in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 2.1 unless such removal
shall be for Cause or such director or the Person(s) entitled to designate or
nominate such director shall have consented to such removal in writing, provided
that if the Persons entitled to designate or nominate any director pursuant to
Section 2.1 shall request the removal, with or without Cause, of such director
in writing, such Shareholder shall vote its shares of Common Stock in favor of
such removal. Removal for "Cause" shall mean removal of a director because of
such director's (a) willful and continued failure substantially to perform his
duties with the Company in his established position, (b) willful conduct which
is injurious to the Company or any of its Subsidiaries, monetarily or otherwise,
or (c) conviction for, or guilty plea to, a felony or a crime involving moral
turpitude.
Section II.3 VACANCIES. If, as a result of death, disability,
retirement, resignation, removal (with or without Cause) or otherwise, there
shall exist or occur any vacancy on the Board:
(a) the Shareholder(s) entitled under Section 2.1 to nominate
such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, may, subject to the provisions of
Section 2.1, nominate another individual (the "Nominee") to fill such
vacancy and serve as a director of the Company;
(b) subject to Section 2.1, each Shareholder then entitled to
vote for the election of the Nominee as a director of the Company
agrees that it will vote its shares of Common Stock, or execute a
written consent, as the case may be, in order to ensure that the
Nominee be elected to the Board; and
(c) in the case of removal of either of the Primary Executives
from the Board, the other Primary Executive, if he is still a member of
the Board, shall be entitled to nominate an individual to fill
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the resulting vacancy, and the provisions of Section 2.3(b) shall apply to the
election of such nominee.
Section II.4 ACTION BY THE BOARD. (a) A quorum of the Board
shall consist initially of three directors; provided that THL shall have the
right, subject to applicable law or regulation, in its sole discretion, until
such time as THL owns less than 25% of its Initial Ownership of shares of Common
Stock, to increase or decrease the number of directors necessary to constitute a
quorum.
(b) All actions of the Board shall require the
affirmative vote of at least a majority of the directors at a duly
convened meeting of the Board at which a quorum is present or the unanimous
written consent of the Board; provided that, in the event there is a vacancy on
the Board and an individual has been nominated to fill such vacancy, the first
order of business shall be to fill such vacancy.
Section II.5 CONFLICTING CHARTER OR BYLAW PROVISION. Each
Shareholder shall vote its shares of Common Stock, and shall take all other
actions reasonably necessary, to ensure that the Company's certificate of
incorporation and bylaws (copies of which are attached hereto as Exhibits A and
B) facilitate and do not at any time conflict with any provision of this
Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFER
Section III.1 GENERAL. (a) Each Equity Investor understands
and agrees that the shares of Common Stock purchased pursuant to the
Subscription Agreement and the Equity Warrants received pursuant to the Equity
Warrant Acquisition Agreement have not been registered under the Securities Act
and are restricted securities. Each Shareholder agrees that it will not,
directly or indirectly, sell, assign, transfer, grant a participation in, pledge
or otherwise dispose of ("Transfer") any Shares or Equity Warrants (or solicit
any offers to buy
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or otherwise acquire, or take a pledge of any Shares or Equity Warrants) except
in compliance with the Securities Act and the terms and conditions of this
Agreement.
(b) Any attempt by any Shareholder to Transfer any
Shares or Equity Warrants not in compliance with this Agreement shall be null
and void and the Company shall not, and shall cause any transfer agent not to,
give any effect in the Company's stock records to such attempted Transfer.
(c) Notwithstanding anything herein to the contrary,
except as may be otherwise set forth in the applicable instrument, Derivatives
(other than the Equity Warrants) shall be transferable only by will, law of
descent or distribution or pursuant to Section 4.2 hereof.
Section III.2 LEGENDS. (a) In addition to any other legend
that may be required, each certificate for Shares that is issued to any
Shareholder shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
LIMITATIONS OR RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS' AGREEMENT
DATED AS OF JANUARY 21, 1998, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL INC. OR ANY SUCCESSOR THERETO."
(b) If any Shares shall cease to be Registrable
Securities under clause (i) or clause (ii) of the definition thereof, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares without the first sentence of
the legend required by Section 3.2(a) endorsed thereon. If any Shares cease to
be subject to any and all limitations or restrictions on Transfer set forth in
this Agreement, the Company shall, upon the written request of the holder
thereof, issue to
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such holder a new certificate evidencing such Shares without the second sentence
of the legend required by Section 3.2(a) endorsed thereon.
Section III.3 PERMITTED TRANSFEREES; TRANSFERS BY THL
ENTITIES; EXCHANGES BY THL ENTITIES. Notwithstanding anything in this Agreement
to the contrary, (a) any Non-THL Shareholder may at any time Transfer any or all
of its Shares or Equity Warrants to one or more of its Permitted Transferees so
long as (i) such Permitted Transferee shall have agreed in writing to be bound
by the terms of this Agreement pursuant to Section 7.3 and (ii) the Transfer to
such Permitted Transferee is not in violation of applicable federal or state
securities laws and (b) any THL Entity may at any time Transfer any or all of
its Shares or Equity Warrants to any third party (including THL Designated
Transferees) so long as (i) the Transfer is in compliance with Section 4.1
hereof, (ii) if the transferee is to be treated as a THL Designated Transferee,
such transferee shall have agreed in writing to be bound by the terms of this
Agreement pursuant to Section 7.3 and (iii) the Transfer is not in violation of
applicable federal or state securities laws. Any THL Entity may at any time
exchange (a "THL Exchange") with the Company any or all of its voting Equity
Securities on a share-for-share basis for shares of an equivalent class of
non-voting Equity Securities of the Company, which non-voting Equity Securities
shall have substantially the rights, preferences and limitations as set forth in
the form of certificate of designation attached hereto as Exhibit C. The Company
agrees to take all such actions, subject to Applicable Law, as are reasonably
requested by any THL Entity to effectuate a THL Exchange.
Section III.4 RESTRICTIONS ON TRANSFERS BY INSTITUTIONAL
SHAREHOLDERS. Except as provided in Section 3.3, each Institutional Shareholder
and each Permitted Transferee of such Institutional Shareholder may Transfer its
Shares and Equity Warrants only as follows:
(i) in a Transfer made in compliance with Section
4.1 or 4.2;
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(ii) in a Public Offering in connection with the
exercise of its rights under Article 5 hereof;
(iii) following the earlier to occur of (A) the date
on which the Percentage Ownership of such Institutional Shareholder and
its Permitted Transferees is less than 25% of its Initial Ownership of
shares of Common Stock and (B) the seventh anniversary of the Closing
Date, to any Person other than any Adverse Person; or
(iv) in a Transfer made after an Initial Public
Offering in compliance with Rule 144 under the Securities Act;
provided, however, notwithstanding the foregoing, the Institutional
Shareholder may not Transfer an aggregate number of Shares of such
class of Equity Securities that, together with all prior Transfers of
such class by such Institutional Shareholder and its Permitted
Transferees pursuant to one or more Rule 144 Transfers, represents more
than (A) the aggregate number of Shares of such class Transferred by
the THL Entities and their THL Designated Transferees (other than, in
either case, to THL Designated Transferees) MULTIPLIED BY (B) such
Institutional Shareholders' Initial Proportionate Equity Interest of
such class; provided, further, that, for purposes of this subsection
(iv), the Equity Warrants shall be treated as part of the class of
shares of Common Stock and the calculations described herein shall
include the number of shares of Common Stock issuable upon exercise of
such Equity Warrants. The "Initial Proportionate Equity Interest" of a
party is such party's Initial Ownership of such class divided by the
Initial Ownership of THL of such class.
Section III.5 RESTRICTIONS ON TRANSFERS BY MANAGEMENT
SHAREHOLDERS. (a) Except as provided in Section 3.3, each Management Shareholder
and each Permitted Transferee of such Management Shareholder may Transfer its
Shares only as follows or as set forth in Section 3.5(b):
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(i) in a Transfer made in compliance with Section 4.1
or 4.2;
(ii) in a Public Offering in connection with the
exercise of its rights under Article 5 hereof;
(iii) in a Transfer made after an Initial Public
Offering in compliance with Rule 144 under the Securities Act;
provided, however, notwithstanding the foregoing, the Management
Shareholder may not Transfer an aggregate number of Shares of any class
of Equity Securities that, together with all prior Transfers of such
class by such Management Shareholder and its Permitted Transferees
pursuant to one or more Rule 144 Transfers, represents more than (A)
the aggregate number of Shares of such class Transferred by the THL
Entities and their THL Designated Transferees (other than, in either
case, to THL Designated Transferees) MULTIPLIED BY (B) such Management
Shareholders' Initial Proportionate Equity Interest of such class;
(iv) following the tenth anniversary of the Closing
Date to any Third Party other than an Adverse Person; or
(v) subject to Section 3.6, a Transfer by a
Management Shareholder to another Management Shareholder (a "Management
Transfer").
(b) Each Management Shareholder and each Permitted
Transferee of such Management Shareholder may Transfer its Shares to any Person
other than an Adverse Person upon the occurrence of a Qualifying Public
Offering.
Section III.6 COMPANY RIGHT OF FIRST REFUSAL. (a) If a
Management Shareholder (an "Offeror") desires to Transfer Shares to another
Management Shareholder pursuant to the provisions of Section 3.5(a)(v):
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(i) such Offeror shall give notice of such offer (the
"Transfer Notice") to the Company. The Transfer Notice shall state the
terms and conditions of such offer, including the name of the
prospective purchaser, the proposed purchase price per share of such
Shares (the "Offer Price"), payment terms (including a description of
any proposed non-cash consideration), the type of disposition and the
number of such Shares to be transferred ("Offered Shares"). The
Transfer Notice shall further state that the Company may acquire, in
accordance with the provisions of this Agreement, any of the Offered
Shares for the price and upon the other terms and conditions, including
deferred payment (if applicable), set forth therein.
(ii) For a period of ten Business Days after receipt of the
Transfer Notice (the "Option Period"), the Company may, by notice in
writing to the Offeror delivering such Transfer Notice, elect in
writing to purchase all, but not less than all, of the Offered Shares
at the Offer Price. The closing of the purchase of Shares pursuant to
Section 3.5, shall take place at the principal office of the Company on
the tenth day after the expiration of the Option Period. At such
Closing, the Company shall deliver to the Offeror, against delivery of
certificates duly endorsed and stock powers representing the Shares
being acquired by the Company, the Offer Price, on the same terms as
set forth in the Transfer Notice (including any non-cash consideration
described therein), payable in respect of the Shares being purchased by
the Company. All of the foregoing deliveries will be deemed to be made
simultaneously, and none shall be deemed completed until all have been
completed.
(b) The provisions of Section 3.6(a) shall not apply to a Management
Shareholder (other than a Primary Executive) if such Management Shareholder
Transfers Shares aggregating, with all other prior Transfers of Shares by such
Management Shareholder, an amount less
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than 25% of such Management Shareholder's Initial Ownership.
Section III.7 NOTIFICATIONS REGARDING TRANSFERS. To the extent
that either an Institutional Shareholder proposes a Transfer pursuant to Section
3.4(iv) or a Management Shareholder proposes a Transfer pursuant to Section
3.5(a)(iii), such Shareholder shall provide notice to THL at least five Business
Days prior to the proposed Transfer Date of the number of Shares proposed to be
Transferred. Not less than two Business Days prior to the proposed Transfer
Date, THL shall notify such Shareholder of whether the Transfer is believed to
be permitted based on the formulas set forth in Section 3.4(iv) or 3.5(a)(iii),
as applicable.
ARTICLE IV
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
Section IV.1 RIGHTS TO PARTICIPATE IN TRANSFER. (a) If the THL
Entities propose to Transfer (a "Tag-Along Sale") shares of a class of Equity
Securities, other than Transfers of shares of such class (i) in a Public
Offering pursuant to the exercise of their rights under Article 5, (ii) to any
THL Designated Transferee, (iii) up to the Threshold Percentage or (iv) in a THL
Exchange, the Non-THL Shareholders may, at their option, elect to exercise their
rights under this Section 4.1 (each such Shareholder, a "Tag-Along Person");
provided, however, that the exception set forth in clause (iii) shall not apply
to the Primary Executives. The "Threshold Percentage" shall equal 5% in the
aggregate of the THL Entities' Initial Ownership of such class of Equity
Securities.
(b) In the event of a proposed Transfer in accordance with
paragraph (a) above, THL shall provide each Non-THL Shareholder written notice
of the terms and conditions of such proposed Transfer ("Tag-Along Notice") at
least 10 days prior to such proposed Transfer and offer each Tag-Along Person
the opportunity to partici-
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▇▇▇▇ in such sale. The Tag-Along Notice shall identify the number of shares of
such class of Equity Securities to be sold in the Tag-Along Sale ("Tag-Along
Offer"), the price at which the Transfer is proposed to be made, and all other
material terms and conditions of the Tag-Along Offer, including the form of the
proposed agreement, if any. From the date of the Tag-Along Notice, each
Tag-Along Person shall have the right (a "Tag-Along Right"), exercisable by
written notice ("Tag-Along Response Notice") given to THL within 5 Business Days
(the "Tag-Along Notice Period"), to request that THL include in the proposed
Transfer the number of shares of such class of Equity Securities held by such
Tag-Along Person as is specified in such notice; provided that if the aggregate
number of shares of such class of Equity Securities proposed to be sold by the
THL Entities and all Tag-Along Persons in such transaction exceeds the number of
shares of such class of Equity Securities which can be sold on the terms and
conditions set forth in the Tag-Along Notice, then only the Tag-Along Portion of
shares of the THL Entities and each Tag-Along Person shall be sold pursuant to
the Tag-Along Offer. "Tag-Along Portion" means, with respect to any class of
Equity Securities, the number of shares of such class held (or, without
duplication, that such Shareholder has the right to acquire from any Person) by
the Tag-Along Person or THL, as the case may be, multiplied by a fraction, the
numerator of which is the maximum number of shares of such class subject to the
Tag-Along Offer and the denominator of which is the aggregate number of shares
of such class on a Fully Diluted basis owned by all Shareholders. In the event
the THL Entities shall propose to Transfer a number of shares of such class in
excess of the Threshold Percentage, the Tag-Along Portion shall be calculated
with respect to all of the shares proposed to be Transferred by the THL
Entities. To the extent that the Tag-Along Notice provides that shares of Common
Stock and Equity Warrants will be transferred (i) the Equity Warrants and the
Common Stock shall be treated as part of a single class of Equity Securities
and, if applicable, Equity Warrants are referred to in this Section 4.1 as
"shares" of such class, (ii) the calculations described in this Section 4.1 with
respect to such
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Tag-Along Notice shall include the number of shares of Common Stock issuable
upon exercise of such Equity Warrants and (iii) the allocation between Equity
Warrants and shares of Common Stock subject to the Tag-Along Rights will be
proportional to the allocation of the number of Shares subject to the Tag-Along
Notice as compared with the number of Equity Warrants subject to the Tag-Along
Notice.
(c) If the Tag-Along Persons exercise their Tag-Along
Rights hereunder, each Tag-Along Person shall deliver, together with its
Tag-Along Response Notice, to THL the certificate or certificates representing
the Shares of such Tag-Along Person to be included in the Transfer, together
with a limited power-of-attorney authorizing THL to Transfer such Shares on the
terms set forth in the Tag-Along Notice. It is understood that to the extent THL
can do so without affecting the other terms on which the Tag-Along Sale is
proposed to be made, THL will seek to exclude from the terms of such Tag-Along
Sale any material restrictions on the ability, following such Tag-Along Sale, of
any Tag-Along Person to conduct its business in a manner consistent with past
practice. Delivery of such certificate or certificates representing the shares
to be Transferred and the limited power-of-attorney authorizing THL to Transfer
such shares shall constitute an irrevocable acceptance of the Tag-Along Offer by
such Tag-Along Persons. If, at the end of a 120 day period after such delivery,
THL has not completed the Transfer of all such shares on substantially the same
terms and conditions set forth in the Tag-Along Notice, THL shall return to each
Tag-Along Person the limited power-of-attorney (and all copies thereof) together
with all certificates representing the shares which such Tag-Along Person
delivered for Transfer pursuant to this Section 4.1.
(d) Concurrently with the consummation of the
Tag-Along Sale, THL shall notify the Tag-Along Persons thereof, shall
remit to the Tag-Along Persons the total consideration (by bank or certified
check) for the Shares of the Tag-Along Persons Transferred pursuant thereto, and
shall, promptly after the consummation of
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such Tag-Along Sale furnish such other evidence of the completion and time of
completion of such Transfer and the terms thereof as may be reasonably requested
by the Tag-Along Persons.
(e) If at the termination of the Tag-Along Notice
Period any Tag-Along Person shall not have elected to participate in the
Tag-Along Sale, such Tag-Along Person will be deemed to have waived its rights
under Section 4.1(a), with respect to the Transfer of its securities pursuant to
such Tag-Along Sale.
(f) If any Tag-Along Person declines to exercise its
Tag-Along Rights or elects to exercise its Tag-Along Rights with respect to less
than such Tag-Along Person's Tag-Along Portion, the THL Entities shall be
entitled to Transfer, pursuant to the Tag-Along Offer, a number of shares held
by the THL Entities equal to the number of shares constituting the portion of
such Tag-Along Person's Tag-Along Portion with respect to which Tag-Along Rights
were not exercised.
(g) THL may sell, on behalf of the THL Entities and
any Tag-Along Person who exercises the Tag-Along Rights pursuant to this Section
4.1, the shares subject to the Tag-Along Offer on the terms and conditions set
forth in the Tag-Along Notice within 120 days of the date on which Tag-Along
Rights shall have been waived, exercised or expire.
Section IV.2 RIGHT TO COMPEL PARTICIPATION IN CERTAIN
TRANSFERS. (a) If (i) the THL Entities propose to Transfer not less than 50% of
their Initial Ownership of Common Stock to a Third Party in a bona fide sale or
(ii) the THL Entities propose a Transfer in which the shares of Common Stock to
be Transferred by Shareholders constitute more than 50% of the outstanding
shares of Common Stock (a "Drag-Along Sale"), THL may at its option require all
Shareholders to sell all Equity Securities proposed to be sold therein
("Drag-Along Rights") then held by every Non-THL Shareholder, and (subject to
and at the closing of the Drag-Along Sale) to compel to exercise all, but not
less than all, of the Derivatives (whether
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then vested or unvested) held by every Non-THL Shareholder and to sell all of
the Shares received upon such exercise to such Third Party, for the same
consideration and otherwise on the same terms and conditions as the THL
Entities; provided, that any Non-THL Shareholder who holds Derivatives the
exercise price per share of which is greater than the per share price at which
the Shares are to be sold to the Third Party may, if required by THL to exercise
such Derivatives, in place of such exercise, submit to irrevocable cancellation
thereof without any liability for payment of any exercise price with respect
thereto; provided, further, that, upon such Drag-Along Sale, the Primary
Executives shall have the right, but not the obligation, to require the Equity
Investors to, at THL's option, either arrange for the purchase by a third party
or purchase directly all of the Shares held by such Primary Executive as a
condition to consummation of such Drag-Along Sale and, in which case the number
of shares to be sold by each Equity Investor will be reduced on a proportional
basis. The number of shares of each class of Equity Securities to be sold by
each Non-THL Shareholder will be the Drag-Along Portion of the shares of such
class that such Non-THL Shareholder owns. "Drag-Along Portion" means, with
respect to any Non-THL Shareholder and any class of Equity Securities, the
number of Shares of such class of Equity Securities beneficially owned by such
Non-THL Shareholder multiplied by a fraction, the numerator of which is the
number of shares of such class of Equity Securities proposed to be sold by the
THL Entities on behalf of the THL Entities and the Non-THL Shareholders (as
reduced by the number of shares of such class of Equity Securities to be sold by
the Primary Executives in excess of their pro rata interest) and the denominator
of which is the total number of shares of such class of Equity Securities
beneficially owned by the Shareholders. In the event the Drag-Along Sale is not
consummated with respect to any shares acquired upon exercise of Derivatives,
such Derivatives shall be deemed not to have been exercised or cancelled, as
applicable. To the extent the Drag-Along Sale relates to Derivatives, and THL
determines not to compel the exercise thereof, the Derivatives shall be treated
as a
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separate class of Equity Securities and, if applicable, Derivatives are referred
to in this Section 4.2 as "shares" of such class.
(b) THL shall provide written notice of such
Drag-Along Sale to the Non-THL Shareholders (a "Drag-Along Notice")
not later than the fifteenth day prior to the proposed Drag-Along Sale. The
Drag-Along Notice shall identify the Transferee, the number of shares of any
class of Equity Securities, the consideration for which a Transfer is proposed
to be made for each class of Equity Securities (the "Drag-Along Sale Price(s)")
and all other material terms and conditions of the Drag-Along Sale. Subject to
Section 4.2(d), each Non-THL Shareholder shall be required to participate in the
Drag-Along Sale on the terms and conditions set forth in the Drag-Along Notice
and to tender all its Shares as set forth below. It is understood that to the
extent THL can do so without affecting the other terms on which the Drag-Along
Sale is proposed to be made, THL will seek to exclude from the terms of such
Drag-Along Sale any material restrictions on the ability, following such
Drag-Along Sale, of any Non-THL Shareholder to conduct its business in a manner
consistent with past practice. The price(s) payable in such Transfer shall be
the Drag-Along Sale Price(s). Not later than the tenth day following the date of
the Drag-Along Notice (the "Drag-Along Notice Period"), each of the Non-THL
Shareholders shall deliver to a representative of THL designated in the
Drag-Along Notice certificates representing all the Shares beneficially owned
and held by such Non-THL Shareholder, duly endorsed, (or evidence of title and
ownership of any Derivative which are subject to the Drag-Along Sale but which
are not exercised in connection therewith) together with all other documents
required to be executed in connection with such Drag-Along Sale, or if such
delivery is not permitted by applicable law, an unconditional agreement to
deliver such shares pursuant to this Section 4.2 at the closing for such
Drag-Along Sale against delivery to such Non-THL Shareholder of the
consideration therefor. If a Non-THL Shareholder should fail to deliver such
certificates to THL, the Company shall cause the books and records of the
Company to show that such
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shares are bound by the provisions of this Section 4.2 and that such shares
shall be Transferred to the purchaser of the shares immediately upon surrender
for Transfer by the holder thereof.
(c) The THL Entities shall have a period of 90 days
from the date of receipt of the Drag-Along Notice to consummate the Drag-Along
Sale on the terms and conditions set forth in such Drag-Along Sale Notice. If
the Drag-Along Sale shall not have been consummated during such period, THL
shall return to each of the Non-THL Shareholders all certificates or other
evidence of title and ownership representing shares that such Non-THL
Shareholder delivered for Transfer pursuant hereto, together with any documents
in the possession of THL executed by the Non-THL Shareholder in connection with
such proposed Transfer, and all the restrictions on Transfer contained in this
Agreement or otherwise applicable at such time with respect to shares owned by
the Non-THL Shareholders shall again be in effect.
(d) Concurrently with the consummation of the
Transfer of shares pursuant to this Section 4.2, THL shall give notice thereof
to all Shareholders, shall remit to each of the Shareholders who have
surrendered their certificates or other evidence of title and ownership the
total consideration (by bank or certified check) for the shares Transferred
pursuant hereto and shall furnish such other evidence of the completion and time
of completion of such Transfer and the terms thereof as may be reasonably
requested by such Shareholders.
(e) Notwithstanding any provision of this Agreement
to the contrary, in the event the terms on which a Drag-Along Sale is proposed
to be made shall include a provision which materially and adversely affects the
ability of any Non-THL Shareholder to compete in any line of business or
geographic area, such Non-THL Shareholder shall not be required to participate
in the Drag-Along Sale on the terms and conditions set forth in the Drag-Along
Notice. In the event any Shareholder shall elect, pursuant to the preceding
sentence, not to participate in the Drag-Along Sale, THL Entities and their THL
Designated Transferees shall have the right to purchase, and such Shareholder
shall be obligated to sell to the THL Entities and
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their THL Designated Transferees such Shareholder's shares, at the Drag-Along
Sale Price(s) and on substantially the same terms (other than any such
non-compete provision), not later than immediately prior to the consummation of
the Drag-Along Sale. Except as provided above, in connection with any Drag-Along
Sale, all Shareholders shall be subject to (i) the same terms and conditions of
sale and (ii) the same indemnity, contribution, hold-back, escrow or similar
obligations.
Section IV.3 PREEMPTIVE RIGHTS. (a) The Company shall provide
each Shareholder with a written notice (a "Preemptive Rights Notice") of any
proposed issuance by the Company of Equity Securities (other than the issuance
of Equity Securities in connection with a THL Exchange) at least 10 days prior
to the proposed issuance date. Such notice shall specify the price at which the
Equity Securities are to be issued and the other material terms of the issuance.
(i) In the event the Company shall issue any New
Common Securities or New Preferred Securities (collectively, the "New
Securities") to any third party (including any Shareholder) prior to a
Qualifying Public Offering, the THL Entities and each Management
Shareholder shall be entitled to purchase, at the price and on the
terms at which such New Securities are proposed to be issued and
specified in such Preemptive Rights Notice, the THL Entities' or such
Management Shareholder's Preemptive Rights Portion of such class of the
New Securities proposed to be issued. "Preemptive Rights Portion"
means, with respect to New Common Securities, the pro rata portion of
New Common Securities proposed to be issued by the Company, which
amount shall be based upon such Shareholder's Initial Ownership of
shares of Common Stock as a percentage of the sum of the Initial
Ownership of shares of Common Stock of (A) the THL Entities, (B) all
Institutional Shareholders and (C) all Management Shareholders
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and, with respect to New Preferred Securities, the pro rata portion of
New Preferred Securities proposed to be issued by the Company, which
amount shall be based upon such Shareholder's Initial Ownership of
shares of Preferred Stock as a percentage of the sum of the Initial
Ownership of shares of Preferred Stock of (A) the THL Entities and (B)
all Institutional Shareholders.
(ii) In the event that the Company shall issue any New
Securities to any third party (including any Shareholder) following a
Qualifying Public Offering, the THL Entities shall be entitled to
purchase, at the price and on the terms at which such New Securities
are proposed to be issued and specified in such Preemptive Rights
Notice, the THL Entities' Preemptive Rights Portion of such class of
the New Securities proposed to be issued.
(iii) In the event the THL Entities propose to purchase any
New Securities from the Company pursuant to Section 4.3(a)(i) or (ii)
or otherwise, the THL Entities may elect to purchase any or all of
their Preemptive Rights Portion in the form of non-voting New
Securities on the same terms and conditions as would have been
available to purchase shares of voting New Securities.
(iv) In the event the THL Entities propose to purchase any New
Securities from the Company pursuant to 4.3(a)(i) or (ii) or otherwise,
(A) prior to a Qualifying Public Offering, each Institutional
Shareholder, and (B) following a Qualifying Public Offering, each
Non-THL Shareholder shall be entitled to purchase, at the price and on
the terms at which the THL Entities propose to purchase such New
Securities and specified in such Preemptive Rights Notice, such
Shareholder's Preemptive Rights Portion of such class of the New
Securities proposed to be issued in the transaction giving rise to the
THL Entities' proposed purchase of New Securities; provided, however,
such Shareholders shall not be entitled to purchase New Securities
unless the THL Enti-
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ties complete the purchase of New Securities in accordance with the Preemptive
Rights Notice.
A Shareholder may exercise its rights under this Section 4.3
by delivering written notice of its election to purchase New Securities to the
Company, THL and each Non-THL Shareholder within five days of receipt of the
Preemptive Rights Notice. A delivery of such a written notice (which notice
shall specify the number of New Securities to be purchased by the Shareholder
submitting such notice) by such Shareholder shall constitute a binding agreement
of such Shareholder to purchase, subject to the purchase by THL of its portion
of such New Securities, at the price and on the terms specified in the
Preemptive Rights Notice, the number of New Securities specified in such
Shareholder's written notice.
(b) In the event any Non-THL Shareholder declines to
exercise its preemptive rights under this Section 4.3 or elects to exercise such
rights with respect to less than such Shareholder's Preemptive Rights Portion,
the THL Entities shall have the right to purchase, or any Non-THL Shareholder
designated by THL shall have the right to purchase, from the Company the number
of New Securities constituting the Preemptive Rights Portion with respect to
which such Non-THL Shareholder shall not have exercised its preemptive rights.
(c) In the case of any issuance of New Securities,
the Company shall have 90 days from the date of the Preemptive Rights Notice to
consummate the proposed issuance of any or all of such New Securities which the
Shareholders have not elected to purchase at the price and upon terms that are
not materially less favorable to the Company than those specified in the
Preemptive Rights Notice. At the consummation of such issuance, the Company
shall issue certificates representing the New Securities to be purchased by each
Shareholder exercising preemptive rights pursuant to this Section 4.3 registered
in the name of such Shareholder, against payment by such Shareholder of the
purchase price for such New Securities. If the Company proposes to issue
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New Securities after such 90-day period, it shall again comply with the
procedures set forth in this Section.
(d) Notwithstanding the foregoing, no Shareholder
shall be entitled to purchase New Securities as contemplated by
this Section 4.3 in connection with issuances of New Securities (i) to employees
of the Company or any Subsidiary pursuant to employee benefit plans or
arrangements approved by the Board (including upon the exercise of employee
stock options), or (ii) in connection with any bona fide, arm's-length
restructuring or refinancing of outstanding indebtedness (including convertible
indebtedness) of the Company or any Subsidiary. The Company shall not be under
any obligation to consummate any proposed issuance of New Securities, regardless
of whether it shall have delivered a Preemptive Rights Notice in respect of such
proposed issuance.
(e) The Company will use its reasonable best efforts
to provide the Preemptive Rights Notice at least 15 Business Days prior to any
proposed issuance of New Securities. In the event it is impracticable to provide
the Preemptive Rights Notice at least 15 Business Days prior to such issuance,
any Shareholder may offer to finance or arrange to finance the purchase by any
other Shareholder of such other Shareholder's Preemptive Rights Portion and such
financing or arranging Shareholder shall be entitled to receive as compensation
for such services reasonable and customary fees and expenses. No Shareholder
shall be under any obligation to provide or arrange such financing for any other
Shareholder.
Section 4.4. CERTAIN OTHER PURCHASES OF EQUITY SECURITIES. In
the event, at any time after the date hereof and prior to the Trigger Date, the
THL Entities shall acquire any Equity Securities (other than Equity Securities
acquired in a THL Exchange) from any Person other than the Shareholders, THL
shall deliver, within five Business Days of the date of such acquisition, a
notice to each Equity Investor (a "Third Party Purchase Notice") specifying the
class of Equity Securities, the number of shares of such class acquired and the
weighted average of price per share paid by the THL Entities.
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Such Third Party Purchase Notice shall constitute an offer to each such
Shareholder to purchase such Shareholder's Third Party Purchase Portion of the
number of shares of such class acquired by the THL Entities. A Shareholder may
exercise its rights under this Section 4.4 by delivering written notice of its
election to purchase its Third Party Purchase Portion within ten days of receipt
of the Third Party Purchase Notice. A delivery of such written notice (which
shall specify the number of shares of such class of Equity Securities to be
purchased by the Shareholder submitting such notice) by such Shareholder shall
constitute a binding agreement of such Shareholder to purchase, at the price and
on the terms specified in the Third Party Purchase Notice, the number of shares
of a class of Equity Securities specified in such notice. At the consummation of
the Transfer of the shares of a class of Equity Securities purchased by the THL
Entities to any Shareholder that has exercised its right hereunder, the THL
Entities shall deliver to such Shareholder certificates or other evidence of
title and ownership representing the shares of such class of Equity Securities
to be purchased against payment by such Shareholder of the purchase price for
such shares of Equity Securities. "Third Party Purchase Portion" means, with
respect to any Shareholder at any time, the number of shares of the class of
Equity Securities purchased by the THL Entities in a transaction subject to
Section 4.4, multiplied by a fraction, the numerator of which is (i) the number
of shares of such class of Equity Securities on a Fully Diluted basis that such
Shareholder beneficially owns at such time, and the denominator of which is (ii)
the total number of shares of such class of Equity Securities on a Fully Diluted
basis beneficially owned at such time by all Equity Investors. To the extent the
Third Party Purchase Notice relates to Derivatives, such Derivatives shall be
treated as a separate class of Equity Securities and, if applicable, Derivatives
are referred to in this Section 4.4 as "shares" of such class.
ARTICLE V
REGISTRATION RIGHTS
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Section V.1 DEMAND REGISTRATION. (a) If the Company shall
receive a written request by THL that the Company effect the registration under
the Securities Act of all or a portion of the THL Entities' Registrable
Securities, and specifying the intended method of disposition thereof, then the
Company shall promptly give written notice of such requested registration (a
"THL Demand Registration") at least five days prior to the anticipated filing
date of the registration statement relating to such THL Demand Registration to
the Non-THL Shareholders and thereupon will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:
(i) the Registrable Securities of the THL Entities
which the Company has been so requested to register; and
(ii) subject to the restrictions set forth in Section
5.2, all other Registrable Securities of the same class as that to
which THL's request relates for which an effective Piggyback
Registration (as such term is defined in Section 5.2) request has been
made;
provided, that subject to Section 5.1(d) hereof, the Company shall not be
obligated to effect more than six THL Demand Registrations. In no event will the
Company be required to effect more than one THL Demand Registration within any
four-month period.
(b) Promptly after the expiration of the 2-day
period referred to in Section 5.2(a) hereof, the Company will notify all the
Shareholders to be included in the THL Demand Registration (the "Holders") of
the other Holders and the number of Registrable Securities requested to be
included therein. THL may, at any time prior to the effective date of the
registration statement relating to such registration, revoke such re- quest,
without liability to any of the other Holders, by providing a written notice to
the Company revoking such re-
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quest, in which case such request, so revoked, shall not be considered a THL
Demand Registration.
(c) The Company will pay all Registration Expenses in
connection with any THL Demand Registration.
(d) A registration requested pursuant to this
Section 5.1 shall not be deemed to have been effected (i) unless the
registration statement relating thereto (A) has become effective under the
Securities Act and (B) has remained effective for a period of at least 180 days
(or such shorter period in which all Registrable Securities of the Holders
included in such registration have actually been sold thereunder); provided,
that if after any registration statement requested pursuant to this Section 5.1
becomes effective (x) such registration statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court and (y) less than 75% of the Registrable Securities included in
such registration statement have been sold thereunder, such registration
statement shall not be considered a THL Demand Registration, or (ii) if the
Maximum Offering Size (as defined below) is reduced in accordance with Section
5.1(e) such that less than 66 2/3% of the Registrable Securities of the THL
Entities sought to be included in such registration are included.
(e) If a THL Demand Registration involves an
Underwritten Public Offering and the managing underwriter shall advise
the Company and THL that, in its view, (i) the number of shares of Registrable
Securities requested to be included in such registration (including any
securities which the Company proposes to be included which are not Registrable
Securities) or (ii) the inclusion of some or all of the shares of Registrable
Securities owned by the Holders, in any such case, exceeds the largest number of
shares which can be sold without having an adverse effect on such offering,
including the price at which such shares can be sold (the "Maximum Offering
Size"), the Company will include in such registration, in the priority listed
below, up to the Maximum Offering Size:
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(A) first, all Registrable Securities requested by
THL to be registered and all Registrable Securities requested to be
included in such registration by any other Holder pursuant to an
effective Piggyback Registration request (allocated, if necessary for
the offering not to exceed the Maximum Offering Size, pro rata among
the THL Entities and such Holders on the basis of the relative number
of Registrable Securities held by such Shareholder); and
(B) second, any securities proposed to be registered
by the Company.
PROVIDED, however, that in such case, any Holder may elect to withdraw such
Holder's Registrable Securities from the registration.
(f) Upon written notice to THL, the Company may
postpone effecting a registration pursuant to this Section 5.1 on one occasion
during any period of six consecutive months for a reasonable time specified in
the notice but not exceeding 90 days (which period may not be extended or
renewed), if (i) an investment banking firm of recognized national standing
shall advise the Company and THL in writing that effecting the registration
would materially and adversely affect an offering of securities of the Company
the preparation of which had then been commenced or (ii) the Company has a bona
fide business reason for determining that it is in possession of material
non-public information the disclosure of which during the period specified in
such notice the Company believes, in its reasonable judgment, would not be in
the best interests of the Company.
(g) After the Company has effected two Demand
Registrations pursuant to this Section 5.1 of Common Stock, the
Institutional Shareholders, upon request of such Institutional Shareholders
owning a majority of the Shares acquired by such Institutional Shareholders on
the Closing Date, may request that the Company register shares of Registrable
Securities then owned by
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such Institutional Shareholders (an "Institutional Shareholder Demand
Registration"). In no event will the Company be required to effect more than one
such Institutional Shareholder Demand Registration. The provisions of this
Article 5 shall apply, mutatis mutandis, to any such Institutional Shareholder
Demand Registration.
(h) After the Transfer of Shares of Common Stock
representing more than 20% of the Shares collectively owned by the Equity
Investors of the Initial Ownership on a Fully Diluted basis owned by such Equity
Investors, the Primary Executives may request that the Company register Shares
which are Registrable Securities then owned by them (a "Primary Executive Demand
Registration"). In no event will the Company be required to effect more than
three such Primary Executive Demand Registrations. The provisions of this
Article 5 shall apply, mutatis mutandis, to any such Primary Executive Demand
Registration; provided, that, notwithstanding anything to the contrary herein,
(i) no Primary Executive Demand Registrations may be made during the six month
period following the Effective Time or within six months after the effective
date any other registration statement (other than registration statement on From
S-4 or S-8 or similar form), and (ii) the Company must use its best efforts to
effect such Primary Executive Demand Registration as soon as practicable, but in
no event later than 120 days following the date of the demand.
Section V.2 PIGGYBACK REGISTRATION. (a) If the Company
proposes to register any Equity Securities under the Securities Act, whether or
not for sale for its own account (including pursuant to a Demand Registration),
in connection with a public offering (other than a public offering pursuant to a
registration statement filed in connection with a transaction of the type
described in Rule 145 of the Securities Act or for the purpose of issuing
securities pursuant to an employee benefit plan) it will each such time, subject
to the provisions of Section 5.2(b) hereof, give prompt written notice at least
five days prior to the anticipated filing date of the registration statement
relating to such registration to all Shareholders and their respective
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Permitted Transferees (or, in the case of a Demand Registration to all
Shareholders and their Permitted Transferees other than the Shareholder making
the demand), which notice shall set forth such Shareholders' rights under this
Section 5.2 and shall offer all Shareholders the opportunity to include in such
registration statement such number of shares of Common Stock as each such
Shareholder may request (a "Piggyback Registration"). Upon the written request
of any such Shareholder made within 2 days (one of which shall be a Business
Day) after the receipt of notice from the Company (which request shall specify
the number of Registrable Securities intended to be disposed of by such
Shareholder), the Company will use its reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such Shareholders, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered; provided, that (i) if such registration involves an Underwritten
Public Offering, all such Shareholders requesting to be included in the
Company's registration must sell their Registrable Securities to the
underwriters selected as provided in Section 5.4(f) on the same terms and
conditions as apply to the Company or the other selling Shareholder, as
applicable, and (ii) if, at any time after giving written notice of its
intention to register on its own behalf any stock and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such stock, the
Company shall give written notice to all such Shareholders and, thereupon, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration. No registration effected under this Section
5.2 on behalf of the Company shall relieve the Company of its obligations to
effect a Demand Registration, to the extent required by Section 5.1 hereof. The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2
involves an Underwritten Public Offering
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(other than in the case of an Underwritten Public Offering resulting from a
Demand Registration, in which case the provisions with respect to priority of
inclusion in such offering set forth in Section 5.1(e) shall apply) and the
managing underwriter advises the Company that, in its view, the number of shares
of Common Stock which the Company and the selling Shareholders intend to include
in such registration exceeds the Maximum Offering Size, the Company will include
in such registration, in the following priority, up to the Maximum Offering
Size:
(i) first, so much of the Equity Securities proposed
to be registered for the account of the Company as would not cause the
offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to
be included in such registration by any Shareholder pursuant to an
effective Piggyback Registration request (allocated, if necessary for
the offering not to exceed the Maximum Offering Size, pro rata among
such Shareholders on the basis of the relative number of shares of
Registrable Securities held by such Shareholder).
Section V.3 HOLDBACK AGREEMENTS. With respect to each and
every firmly Underwritten Public Offering, each Shareholder (collectively with
all of its Affiliates which are Shareholders) owning Shares representing more
than 1% of the then outstanding Shares (including Shares which would be held
upon any conversion or exercise of rights) agrees, and their Permitted
Transferees will agree, not to offer or sell any Shares (except for Shares, if
any, sold in that Public Offering) during the period which commences on the 14th
day prior to the effective date of the applicable registration statement for a
public offering of Shares (except as part of such registration) and ends on the
earlier of: (i) 180 days after the effective date of the registration statement
or (ii) any such shorter period as the Company and the lead managing underwriter
of an Underwritten Public Offering agree.
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Section V.4 REGISTRATION PROCEDURES. Whenever Shareholders
request that any Registrable Securities be registered pursuant to Section 5.1 or
5.2 hereof, the Company will, subject to the provisions of such Sections, use
its best efforts, or reasonable best efforts, as the case maybe, to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as quickly as practicable, and in any
event within 60 days of the date of demand and in connection with any such
request:
(a) The Company will as expeditiously as possible prepare and
file with the SEC a registration statement on any form selected by
counsel for the Company and which form shall be available for the sale
of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof, and use its best
efforts to cause such filed registration statement to become and remain
effective for a period of not less than 180 days (or such shorter
period in which all of the Registrable Securities of the Holders
included in such registration statement shall have actually been sold
thereunder).
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to each Shareholder and each underwriter, if any, of
the Registrable Securities covered by such registration statement
copies of such registration statement as proposed to be filed, and
thereafter the Company will furnish to such Shareholder and
underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as
such Shareholder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Shareholder. Each Shareholder shall have the
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right to request that the Company modify any information contained in
such registration statement, amendment and supplement thereto
pertaining to such Shareholder and the Company shall use its reasonable
best efforts to comply with such request; provided, however, that the
Company shall not have any obligation to so modify any information if
so doing would cause the prospectus to contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the
Company will (i) cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, (ii) comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement during
the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement or supplement to such prospectus and (iii) promptly notify
each Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the
SEC or any state securities commission under state blue sky laws and
take all reasonable actions required to prevent the entry of such stop
order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions in the United States as the Managing Underwriter or any
Shareholder or Shareholders holding such Registrable Securities
reasonably (in light of such Shareholder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or
authorities as may be nec-
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▇▇▇▇▇▇ by virtue of the business and operations of the Company and do
any and all other acts and things that may be reasonably necessary or
advisable to enable such Shareholder to consummate the disposition of
the Registrable Securities owned by such Shareholder; provided,
however, that the Company will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder
holding such Registrable Securities covered by such registration
statement, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and promptly prepare and make available to each
such Shareholder and file with the SEC any such supplement or
amendment.
(f) In connection with (i) (A) any THL Demand Registration or
(B) any registration by the Company of Registrable Securities, the
Company shall appoint the underwriter or underwriters chosen by THL and
(ii) (A) any Institutional Shareholder Demand Registration or (B) any
Primary Executive Demand Registration, the Company shall appoint the
underwriter or underwriters chosen by Shareholders holding the majority
of the Registrable Securities to be registered; provided, that the
underwriter or underwriters identified in accordance with clauses
(ii)(A) and (ii)(B) shall be reasonably acceptable to the Company. The
Company will enter into customary agreements (including an underwriting
agreement in
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customary form) and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of such Registrable
Securities, including the engagement of a "qualified independent
underwriter" in connection with the qualification of the underwriting
arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to the Company, the Company will make
available for inspection by any Shareholder and any underwriter
participating in any disposition pursuant to a registration statement
being filed by the Company pursuant to this Section 5.4 and any
attorney, accountant or other professional retained by any such
Shareholder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records") as shall be
reasonably requested by any such Person, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration
statement.
(h) The Company will furnish to each such Shareholder and to
each such underwriter, if any, a signed counterpart, addressed to such
underwriter and the participating Shareholders, of (i) an opinion or
opinions of counsel to the Company and (ii) a comfort letter or comfort
letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as a
majority of such Shareholders or the managing underwriter therefor
reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC and the relevant
state blue sky commissions, and make available to its securityholders,
as soon as reasonably practicable,
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an earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) The Company may require each such Shareholder to promptly
furnish in writing to the Company information regarding the
distribution of the Registrable Securities as the Company may from time
to time reasonably request and such other information as may be legally
required in connection with such registration.
(k) Each such Shareholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5.4(e) hereof, such Shareholder will forthwith
discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
Shareholder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5.4(e) hereof, and, if so directed
by the Company, such Shareholder will deliver to the Company all
copies, other than any permanent file copies then in such Shareholder's
possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the
Company shall give such notice, the Company shall extend the period
during which such registration statement shall be maintained effective
(including the period referred to in Section 5.4(a) hereof) by the
number of days during the period from and including the date of the
giving of notice pursuant to Section 5.4(e) hereof to the date when the
Company shall make available to such Shareholder a prospectus
supplemented or amended to conform with the requirements of Section
5.4(e) hereof.
(l) The Company will use its best efforts to list such
Registrable Securities on any securities exchange on which the Common
Stock is then listed or
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on NASDAQ if the Common Stock is then quoted on NASDAQ not later than
the effective date of such registration statement.
Section V.5 INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless each Shareholder holding Registrable Securities
covered by a registration statement, its officers, directors, employees,
partners and agents, and each Person, if any, who controls such Shareholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (and officers, directors, employees, partners and agents of such
controlling Persons) from and against any and all losses, claims, damages, joint
or several liabilities or expenses (including reasonable attorneys' fees and
expenses and reasonable costs of investigation) caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission so made in strict conformity
with information furnished in writing to the Company by such Shareholder or on
such Shareholder's behalf expressly for use therein; provided that with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, or in any final prospectus, as the case may be,
the indemnity agreement contained in this paragraph shall not apply to the
extent that any such loss, claim, damage, liability or expense results from the
fact that a current copy of the final prospectus (or, in the case of a final
prospectus, the final prospectus as amended or supplemented) was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such Person if it is determined
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that the Company has provided such current copy of such final prospectus (or
such amended or supplemented prospectus, as the case may be) to such Shareholder
in a timely manner prior to such sale and it was the responsibility of such
Shareholder under the Securities Act to provide such Person with a current copy
of the prospectus (or such amended or supplemented prospectus, as the case may
be) and such current copy of the final prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The Company also agrees
to indemnify any underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Shareholders provided in this
Section 5.5.
Section V.6 INDEMNIFICATION BY PARTICIPATING SHAREHOLDERS.
Each Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors and agents and each Person (other than such
Shareholder), if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Shareholder, but only
(i) with respect to information furnished in writing by such Shareholder or on
such Shareholder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section 5.5 results from
the fact that a current copy of the final prospectus (or, in the case of a
prospectus, the prospectus as amended or supplemented) was not sent or given to
the Person asserting any such loss, claim, damage, liability or expense at or
prior to the time of the written confirmation of the sale of the Registrable
Securities concerning such Person if it is determined that it was the
responsibility of such Shareholder to provide such Person with a current copy of
the final prospectus (or such amended or supplemented pro-
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spectus, as the case may be) and such current copy of the final prospectus (or
such amended or supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability or expense. Each
such Shareholder shall be prepared, if required by the underwriting agreement,
to indemnify and hold harmless underwriters of the Registrable Securities, their
officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 5.6. As a condition to including Registrable Securities
in any registration statement filed in accordance with Article 5 hereof, the
Company may require that it shall have received an undertaking reasonably
satisfactory to it from any underwriter to indemnify and hold it harmless to the
extent customarily provided by underwriters with respect to similar securities.
No Shareholder shall be liable under Section 5.6 for any
damage thereunder in excess of the net proceeds realized by such Shareholder in
the sale of the Registrable Securities of such Shareholder.
Section V.7 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case
any proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this Article 5, such Person (an "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
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Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any and all losses, claims, damages, liabilities and expenses or
liability (to the extent stated above) by reason of such settlement or judgment.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such proceeding.
Section V.8 CONTRIBUTION. If the indemnification provided for
in this Article 5 is held by a court of competent jurisdiction to be unavailable
to the Indemnified Parties in respect of any losses, claims, damages or
liabilities referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company and the Shareholders holding Registrable
Securities covered by a registration statement and their related Indemnified
Parties on the one hand and the underwriters
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and their related Indemnified Parties on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company and such
Shareholders on the one hand and the underwriters on the other, from the
offering of the Shareholders' Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
such Shareholders on the one hand and of such underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company and their related Indemnified
Parties on the one hand and each such Shareholder and their related Indemnified
Parties on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each such Shareholder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such
Shareholders on the one hand and such underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and such Shareholders bear to the total underwriting discounts
and commissions received by such underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
such Shareholders on the one hand and of such underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such
Shareholders or by such underwriters. The relative fault of the Company on the
one hand and of each such Shareholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge,
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access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Shareholders agree that it would not be
just and equitable if contribution pursuant to this Section 5.8 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.8 no underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to securities purchased by such underwriter in such offering, less
the aggregate amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Shareholder shall be required to contribute any
amount in excess of the amount by which the net proceeds realized on the sale of
the Registrable Securities of such Shareholder exceeds the amount of any damages
which such Shareholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Each Shareholder's obligation
to contribute pursuant to this Section 5.8 is several in the proportion that the
proceeds of the offering received by such Shareholder bears to the total
proceeds of the offering received by all such Shareholders and not joint.
Section V.9 PARTICIPATION IN PUBLIC OFFERING. No Person may
participate in any Underwritten Public Offering hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
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underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement in respect of registration rights.
Section V.10 COOPERATION BY THE COMPANY. In the event any
Shareholder shall Transfer any Registrable Securities pursuant to Rule 144A
under the Securities Act, the Company shall cooperate, to the extent
commercially reasonable, with such Shareholder and shall provide to such
Shareholder such information as such Shareholder shall reasonably request.
Section V.11 NO TRANSFER OF REGISTRATION RIGHTS. None of the
rights of Shareholders under this Article 5 shall be assignable by any
Shareholder to any Person acquiring securities of such Shareholder in any Public
Offering or pursuant to Rule 144A of the Securities Act.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
Section VI.1 CONFIDENTIALITY. (a) Each Shareholder hereby
agrees that Confidential Information (as defined below) furnished and to be
furnished to it was and will be made available in connection with such
Shareholder's investment in the Company. Each Shareholder agrees that it will
use the Confidential Information only in connection with its investment in the
Company and not for any other purpose. Each Shareholder further acknowledges and
agrees that it will not disclose any Confidential Information to any Person;
provided that Confidential Information may be disclosed (i) to such
Shareholder's Representatives (as defined below) in the normal course of the
performance of their duties or to any financial institution providing credit to
such Shareholder, (ii) to the extent required by applicable law, rule or
regulation (including complying with any oral or
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written questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process to which a Shareholder
is subject; provided that such Shareholder gives the Company prompt notice of
such request(s), to the extent practicable, so that the Company may seek an
appropriate protective order or similar relief (and the Shareholder shall
cooperate with such efforts by the Company, and shall in any event make only the
minimum disclosure required by such law, rule or regulation)), (iii) to any
Person to whom such Shareholder is contemplating a Transfer of its Shares
(provided that such Transfer would not be in violation of the provisions of this
Agreement and as long as such potential Transferee is advised of the
confidential nature of such information and agrees to be bound by a
confidentiality agreement in form and substance satisfactory to the Company (it
being understood that a confidentiality agreement consistent with the provisions
hereof shall be satisfactory to the Company)) or (iv) if the prior written
consent of the Board shall have been obtained. Nothing contained herein shall
prevent the use (subject, to the extent possible, to a protective order) of
Confidential Information in connection with the assertion or defense of any
claim by or against the Company or any Shareholder. Notwithstanding the
foregoing, each Shareholder or Affiliate of a Shareholder who engages
principally in the business of effecting or recommending transactions, either as
a principal or as agent on behalf of third parties, in, relating to or involving
securities (including public securities of the Company or its subsidiaries) and
including, without limitation, transactions in which such Shareholder or
Affiliate may act as an investment advisor, an investment company, a broker or
dealer in securities, an underwriter or placement agent of securities, a market
maker, a specialist, an arbitrageur, a block positioner or a provider of
securities research, may engage in such activities with respect to securities of
the Company so long as, prior to engaging in any such activities (i) such
Shareholder has established an effective "ethical wall" between individuals
receiving Confidential Information and those individuals (including Affiliates)
involved in effectuating trades or other transactions involving such securities
of the
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Company or its subsidiaries, which "ethical wall" is designed to prevent any
transfer, directly or indirectly, of Confidential Information and (ii) such
purchases, sales, dealings or other transactions are made only in accordance
with such "ethical wall" policies and procedures in accordance with applicable
law, rule or regulation.
(b) "Confidential Information" means any information
concerning the Company and Persons which are or become its subsidiaries or the
financial condition, business, operations or prospects of the Company and
Persons which are or become its subsidiaries in the possession of or furnished
to any Shareholder (including, without limitation by virtue of its present or
former right to designate a director of the Company); provided that the term
"Confidential Information" does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by a
Shareholder or its partners, directors, officers, employees, agents, counsel,
investment advisers or representatives (all such persons being collectively
referred to as "Representatives") in violation of the Merger Agreement or this
Agreement, (ii) is or was available to such Shareholder on a nonconfidential
basis prior to its disclosure to such Shareholder or its Representatives by the
Company or (iii) was or becomes available to such Shareholder on a
non-confidential basis from a source other than the Company, provided that such
source is or was (at the time of receipt of the relevant information) not, to
the best of such Shareholder's knowledge, bound by a confidentiality agreement
with (or other confidentiality obligation to) the Company or another Person.
Section VI.2 REPORTS. The Company will furnish all the Equity
Investors with the quarterly and annual financial reports that the Company is
required to file with the Securities and Exchange Commission pursuant to Section
13 or Section 15(d) of the Exchange Act promptly after the filing thereof or, in
the event the Company is not required to file such reports, quarterly and annual
reports containing the same information as
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would be required in such reports on the date that such reports would otherwise
be filed.
Section VI.3 LIMITATIONS ON SUBSEQUENT REGISTRATION. The
Company shall not enter into any agreement with any holder or prospective holder
of any securities of the Company (a) which conflicts with the provision of
Article V, (b) that would allow such holder or prospective holder to include
such securities in any registration filed pursuant to Section 5.1 or 5.2 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such securities would not reduce the amount of the Registrable
Securities of the Shareholders included therein or (c) on terms otherwise more
favorable than this Agreement.
Section VI.4 LIMITATION ON PURCHASE OF EQUITY SECURITIES.
Until the earlier to occur of (i) the seventh anniversary of the Closing Date or
(ii) the date on which at least 40% of the outstanding Common Stock on a Fully
Diluted basis of the Company is held by Persons other than the Shareholders (the
"Trigger Date"), no Non-THL Shareholder shall acquire any Equity Securities
except if (A) with respect to each Institutional Shareholder, such Shareholder
may acquire Equity Securities in a purchase of Equity Securities pursuant to
Section 4.3 or 4.4 hereof, (B) with respect to each Management Shareholder, such
Shareholder may acquire Equity Securities either in a purchase of Equity
Securities pursuant to Section 4.3 or 4.4 hereof or in any other transaction so
long as THL has been notified at least five Business Days in advance and if
given a reasonable opportunity to consult with such Shareholder prior to the
purchase or (C) in a Transfer from any other Non-THL Shareholder which is
otherwise permitted under the terms of Article 3 hereof.
Section VI.5 REGULATED STOCKHOLDERS.
(a) If a Regulated Stockholder determines that it has a
Regulatory Problem, the Company agrees to take
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all such actions, subject to Applicable Law, as are reasonably requested by such
Regulated Stockholder (i) to effectuate and facilitate any transfer by such
Regulated Stockholder of any Equity Securities of the Company then held by such
Regulated Stockholder to any Person designated by such Regulated Stockholder,
(ii) to permit such Regulated Stockholder (or any Affiliate of such Regulated
Stockholder) to exchange all or any portion of the voting Equity Securities then
held by such Person on a share-for-share basis for shares of a class of
non-voting Equity Securities of the Company, which non-voting Equity Securities
shall be convertible into voting Equity Securities on such terms as are
requested by such Regulated Stockholder in light of regulatory considerations
then prevailing, and (iii) to continue and preserve the respective allocation of
the voting interests with respect to the Company provided for in this Agreement
and with respect to such Regulated Stockholder's ownership of the Company's
voting Equity Securities. Such actions may include, without limitation, (x)
entering into such additional agreements as are reasonably requested by such
Regulated Stockholder to permit any Person(s) designated by such Regulated
Stockholder to exercise any voting power which is relinquished by such Regulated
Stockholder upon any exchange of voting Equity Securities for non-voting Equity
Securities of the Company, and (y) entering into such additional agreements,
adopting such amendments to the charter documents of the Company and taking such
additional actions as are reasonably requested by such Regulated Stockholder in
order to effectuate the intent of the foregoing.
(b) If a Regulated Stockholder has the right or opportunity to
acquire any of the Company's Equity Securities from the Company, any Stockholder
or any other Person (as the result of a preemptive offer, pro rata offer or
otherwise), at such Regulated Stockholder's request, the Company will offer to
sell (or if the Company is not the seller, to cooperate with the seller and such
Regulated Stockholder to permit such seller to sell) such non-voting Equity
Securities on the same terms as would have existed had such Regulated
Stockholder acquired the Equity Securities so offered and immediately
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requested their exchange for non-voting Equity Securities pursuant to clause (a)
above.
(c) The Company agrees not to amend or waive the voting or
other provisions of this Agreement or the Company's charter documents if such
amendment or waiver would cause any Regulated Stockholder to have a Regulatory
Problem; provided that any such Regulated Stockholder notifies the Company that
it would have a Regulatory Problem promptly after it has notice of such
amendment or waiver.
ARTICLE VII
MISCELLANEOUS
Section VII.1 ENTIRE AGREEMENT. This Agreement, the Merger
Agreement, the Subscription Agreement and the Equity Warrant Acquisition
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
Section VII.2 BINDING EFFECT; BENEFIT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto, and their respective heirs, successors,
legal representatives and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
Section VII.3 ASSIGNABILITY. (a) Neither this Agreement nor
any right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company or any Shareholder; provided that any Person
acquiring shares of Common Stock who is
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required by the terms of this Agreement to become a party hereto shall execute
and deliver to the Company an agreement to be bound by this Agreement and shall
thenceforth be a "Shareholder."
(b) Any Permitted Transferee of a Management
Shareholder who shall become a party hereto shall be deemed a "Management
Shareholder."
(c) Any Permitted Transferee of an Institutional
Shareholder who shall become a party to this Agreement shall be deemed an
"Institutional Shareholder."
Section VII.4 AMENDMENT; WAIVER; TERMINATION. (a No provision
of this Agreement may be waived except by an instrument in writing executed by
the party against whom the waiver is to be effective. No provision of this
Agreement may be amended or otherwise modified except by an instrument in
writing executed by the Company with approval of the Board of Directors and
holders of at least 50% of the shares of Common Stock held by the parties to
this Agreement at the time of such proposed amendment or modification.
Notwithstanding the foregoing or any other provision of this Agreement, THL may
at any time, including after completion of a Qualifying Public Offering, and
without any other action by any other party, effectuate an amendment to this
Agreement to delete in its entirety Section 4.3(a); provided, however, that if
THL causes such Section to be deleted, so long as the THL Entities own at least
10% of their Initial Ownership of shares of Common Stock, the THL Entities shall
not purchase any New Securities from the Company unless the Company offers each
Non-THL Shareholder the right to participate in the purchase of such New
Securities in accordance with Section 4.3(a)(iii) as if it continued to be in
effect.
(b) In addition, any amendment or modification of
any provision of this Agreement that would adversely affect THL may be effected
only with the consent of THL.
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(c) In addition, any amendment or modification of
any provision of this Agreement that would adversely affect any (i)
Institutional Shareholder may be effected only with the consent of such
Institutional Shareholders holding at least 66 2/3% of the shares of Common
Stock held by such Institutional Shareholders or (ii) Management Shareholder may
be effected only with the consent of the Management Shareholders (which must
include the Primary Executives) holding at least 50% of the shares of Common
Stock held by the Management Shareholders.
(d) This Agreement shall terminate on January 21,
2008 unless earlier terminated.
Section VII.5 NOTICES. (a) All notices and other
communications given or made pursuant hereto or pursuant to any other agreement
among the parties, unless otherwise specified, shall be in writing and shall be
deemed to have been duly given and received when sent by fax (with confirmation
in writing via first class U.S. mail) or delivered personally or on the third
Business Day after being sent by registered or certified U.S. mail (postage
prepaid, return receipt requested) to the parties at the fax number or address
set forth below or at such other addresses as shall be furnished by the parties
by like notice:
(i) if to the Company, to:
▇▇▇▇▇▇ Scientific International, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to a Management Shareholder who holds Equity
Securities exclusively through the Rabbi Trust, to such
Shareholder's attention at the following address:
▇▇▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ Building
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
(iii) if to any other Management Shareholder, to such
Shareholder's attention at the following address:
▇▇▇▇▇▇ Scientific International, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) if to a THL Associate, to such Shareholder's attention at
the following address:
▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(v) if to any other Shareholder, to such Shareholder at the
address specified by such Shareholder on the signature pages
of this Agreement.
Any Shareholder may change its notice address by providing
notice to the Company with a copy, in the case of the Non-THL Shareholders, to
▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Person who becomes a Shareholder shall provide its address
and fax number to the Company, which shall promptly provide such information to
each Non-THL Shareholder.
(b) Notices required to be given pursuant to
Sections 5.1(a) and 5.1(b) and Section 5.2 by the Company shall be deemed given
only if such notices are also be given telephonically and by fax to the
following persons (or any other individual the respective entities may designate
in writing to the Company to replace such person):
(i) for the benefit of the THL Entities, to ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇
▇. ▇▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇);
(ii) for the benefit of the Management
Shareholders, to ▇▇▇▇ ▇▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇),
with a copy to ▇▇▇▇ ▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇);
(iii) for the benefit of the DLJ Entities, to
▇▇▇▇▇▇▇▇ ▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇) and ▇▇▇▇ ▇▇▇▇▇▇▇
(tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇);
(iv) for the benefit of Chase Equity, to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax ▇▇▇-▇▇▇-▇▇▇▇);
(v) for the benefit of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities,
to ▇▇▇▇▇▇ ▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇) and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (tel: ▇▇▇-▇▇▇-▇▇▇▇; fax: ▇▇▇-▇▇▇-▇▇▇▇).
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Section VII.6 HEADINGS. The headings contained in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section VII.7 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
Section VII.8 APPLICABLE LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to the conflicts of laws rules of such state.
Section VII.9 SPECIFIC PERFORMANCE. Each party hereto
acknowledges that the remedies at law of the other parties for a breach or
threatened breach of this Agreement would be inadequate and, in recognition of
this fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other equitable
remedy which may then be available.
Section VII.10 CONSENT TO JURISDICTION; EXPENSES. (a) Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any Federal Court sitting in the State
of Delaware or any Delaware State court sitting in Delaware, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court
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has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party by any method provided in
Section 7.5 shall be deemed effective service of process on such party and
consents to the personal jurisdiction of any Federal Court sitting in the State
of Delaware, or any Delaware State court sitting in Delaware.
(b) In any dispute arising under this Agreement among any of
the parties hereto, the costs and expenses (including, without limitation, the
reasonable fees and expenses of counsel) incurred by the prevailing party shall
be paid by the party that does not prevail.
Section VII.11 REPRESENTATIVE.
(a) Each THL Entity hereby designates and appoints
(and each Permitted Transferee of each such THL Entities is hereby deemed to
have so designated and appointed) each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇, as his attorney-in-fact with full power of substitution for each of
them (the "THL Entities' Representative"), to serve as the representative of
each such person to perform all such acts as are required, authorized or
contemplated by this Agreement to be performed by such person and hereby
acknowledges that the THL Entities' Representative shall be the only person
authorized to take any action so required, authorized or contemplated by this
Agreement by each such person. Each such person further acknowledges that the
foregoing appointment and designation shall be deemed to be coupled with an
interest and shall survive the death or incapacity of such person. Each such
person hereby authorizes (and each such Permitted Transferee shall be deemed to
have authorized) the other parties hereto to disregard any notice or other
action taken by such person pursuant to this Agreement except for the THL
Entities' Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the THL Entities'
Representative and are and will be
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entitled and authorized to give notices only to the THL Entities' Representative
for any notice contemplated by this Agreement to be given to any such person. A
successor to the THL Entities' Representative may be chosen by a majority in
interest of the THL Entities' Shareholders, provided that notice thereof is
given by the new THL Entities' Representative to the Company and to each Non-THL
Shareholder.
(b) Each DLJ Entity hereby designates and appoints
(and each Permitted Transferee of each such DLJ Entities' is
hereby deemed to have so designated and appointed) DLJ Merchant Banking II,
Inc., as his attorney-in-fact with full power of substitution for each of them
(the "DLJ Entities' Representative"), to serve as the representative of each
such person to perform all such acts (other than voting of shares of Common
Stock) as are required, authorized or contemplated by this Agreement to be
performed by such person and hereby acknowledges that the DLJ Entities'
Representative shall be the only person authorized to take any action so
required, authorized or contemplated by this Agreement by each such person. Each
such person hereby authorizes (and each such Permitted Transferee shall be
deemed to have authorized) the other parties hereto to disregard any notice or
other action taken by such person pursuant to this Agreement except for the DLJ
Entities' Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the DLJ Entities'
Representative and are and will be entitled and authorized to give notices only
to the DLJ Entities' Representative for any notice contemplated by this
Agreement to be given to any such person. A successor to the DLJ Entities'
Representative may be chosen by a majority in interest of the DLJ Entities'
Shareholders, provided that notice thereof is given by the new DLJ Entities'
Representative to the Company and to each other DLJ Entity Shareholder.
(c) Each ▇▇▇▇▇▇▇ ▇▇▇▇▇ Entity hereby designates and
appoints (and each Permitted Transferee of each such ▇▇▇▇▇▇▇
▇▇▇▇▇ Entities is hereby deemed to have so designated and appointed) KECALP
Inc., as his
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attorney-in-fact with full power of substitution for each of them (the "▇▇▇▇▇▇▇
▇▇▇▇▇ Entities Representative"), to serve as the representative of each such
person to perform all such acts as are required, authorized or contemplated by
this Agreement to be performed by such person and hereby acknowledges that the
▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities Representative shall be the only person authorized to
take any action so required, authorized or contemplated by this Agreement by
each such person. Each such person further acknowledges that the foregoing
appointment and designation shall be deemed to be coupled with an interest and
shall survive the death or incapacity of such person. Each such person hereby
authorizes (and each such Permitted Transferee shall be deemed to have
authorized) the other parties hereby to disregard any notice or other action
taken by such person pursuant to this Agreement except for the ▇▇▇▇▇▇▇ ▇▇▇▇▇
Entities Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities
Representative and are and will be entitled and authorized to give notices only
to the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities Representative for any notice contemplated by this
Agreement to be given to any such person. A successor to the ▇▇▇▇▇▇▇ ▇▇▇▇▇
Entities Representative may be chosen by a majority in interest of the ▇▇▇▇▇▇▇
▇▇▇▇▇ Entities' Shareholders, provided that notice thereof is given by the new
▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities Representative to the Company and to each other ▇▇▇▇▇▇▇
▇▇▇▇▇ Entity Shareholder.
(d) Each Management Shareholder hereby designates
and appoints (and each Permitted Transferee of each such Management Shareholder
is hereby deemed to have so designated and appointed) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as his
attorney-in-fact with full power of substitution for each of them (the
"Management Representative"), to serve as the representative of each such person
to perform all such acts as are required, authorized or contemplated by this
Agreement to be performed by such person and hereby acknowledges that the
Management Representative shall be the only person authorized to take any action
so required, authorized or contemplated by this Agreement by each such person.
Each such person further acknowledges
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that the foregoing appointment and designation shall be deemed to be coupled
with an interest and shall survive the death or incapacity of such person. Each
such person hereby authorizes (and each such Permitted Transferee shall be
deemed to have authorized) the other parties hereby to disregard any notice or
other action taken by such person pursuant to this Agreement except for the
Management Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the Management Representative
and are and will be entitled and authorized to give notices only to the
Management Representative for any notice contemplated by this Agreement to be
given to any such person. A successor to the Management Representative may be
chosen by a majority in interest of the Management Shareholders, provided that
notice thereof is given by the new Management Representative to the Company and
to each other Management Shareholder.
Section VII.12 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable to any extent under applicable law, such
provision shall be interpreted as if it were written so as to be enforceable to
the maximum possible extent so as to effectuate the parties' intent to the
maximum possible extent, and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in accordance
with its terms to the maximum extent permitted by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - General Counsel
and Secretary
72
THL Equity Shareholders:
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/
------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/
------------------------------------
Name:
Title:
73
THL FSI EQUITY INVESTORS, L.P.
By: THL Equity Advisors III
Limited Partnership, as
General Partner
By: THL Equity Trust III,
as General Partner
By: /s/
------------------------------------
Name:
Title:
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management
Corp.,as General Partner
By: /s/
------------------------------------
Name:
Title:
74
Management Shareholders:
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
75
DLJ Entities' Shareholders:
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/
------------------------------------
Name:
Title:
76
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJ DIVERSIFIED PARTNERS - A, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
77
DLJ MILLENNIUM PARTNERS - A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJMB FUNDING II, INC.
By: /s/
------------------------------------
Name:
Title:
UK INVESTMENT PLAN 1997 PARTNERS
By: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Inc.,
as general partner
By: /s/
------------------------------------
Name:
Title:
78
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management Corporation,
as managing general partner
By: /s/
------------------------------------
Name:
Title:
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/
------------------------------------
Name:
Title:
DLJ FIRST ESC, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/
------------------------------------
Name:
Title:
The address for each of the DLJ
Entities listed above is:
c/o DLJ Merchant Banking II, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
79
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
By: /s/
------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
80
▇▇▇▇▇▇▇ ▇▇▇▇▇ Entities:
ML IBK POSITIONS, INC.
By: /s/
------------------------------------
Name:
Title:
KECALP INC.
By: /s/
------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ KECALP L.P. 1997
By: KECALP Inc., as general partner
By: /s/
------------------------------------
Name:
Title:
The address for each of the ▇▇▇▇▇▇▇
▇▇▇▇▇ Entities listed above is:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
81
Individual Shareholders:
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: The 1995 Harkins Gift Trust
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Money Purchase Pension Plan
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇▇▇ Family Limited
Partnership
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
82
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: THL-CCI Limited Partnership
By: ▇▇▇▇▇ ▇. Master
Title: Vice President
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/
------------------------------------
Name: First Trust Co. FBO
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
83
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
